Ways to Measure Productivity Improvement

Productivity improvement is a broad business goal. There are many ways to reflect productivity improvement.

The common ways to measure productivity improvement include cost-based measures such as reduction in unit cost, time-based measures such as increase in quantity produced per hour, and value-based measures such as better customer satisfaction.

The cost-based and time-based measures are usually fairly easy to identify. Most of the time, they relate to economies of scale.

The value-based measures are often benefits such as freed up capital for other investments, better risk control, lower staff turnover, freed up capacity and so on.

In measuring productivity improvement, direct benefits are most pertinent. But don’t discount the indirect benefits as they could be necessary groundwork for something bigger down the road.